COLLABORATION AND LICENSE AGREEMENT

Exhibit 10.1

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

CONFIDENTIAL

Execution Copy

COLLABORATION AND LICENSE AGREEMENT

This C OLLABORATION AND L ICENSE A GREEMENT (“ Agreement ”) is entered into as of May 1, 2009 (the “ Effective Date ”) between ACADIA P HARMACEUTICALS I NC . , a company organized under the laws of the State of Delaware, United States (“ ACADIA ”), and having a principal place of business at 3911 Sorrento Valley Boulevard, San Diego, California, United States, and B IOVAIL L ABORATORIES I NTERNATIONAL SRL , a Barbados society with restricted liability (“ BLS ”), having its registered office at Welches, Christ Church, Barbados WI, BB17154.

WHEREAS

A. ACADIA is developing Pimavanserin (as defined hereinafter), a selective 5-HT _2A inverse agonist, for the treatment of Parkinson’s disease psychosis, and other indications, including Alzheimer’s disease psychosis. ACADIA owns or controls certain patents, know-how and other intellectual property relating to Pimavanserin and Product (as defined hereinafter); and

B. BLS desires to obtain from ACADIA certain exclusive rights and licenses to make, have made, use, sell, offer for sale and import Pimavanserin and Product in the Field (as defined hereinafter) in the United States and Canada and a license to conduct development and manufacturing activities in the Field outside the Territory solely for developing and commercializing Product in the Field in the United States and Canada, and ACADIA is willing to grant to BLS such rights and licenses on the terms and conditions set forth in this Agreement; and

C. BLS intends to appoint one or more Distributor(s) (as defined hereinafter) to distribute Product in the United States; and

D. ACADIA desires to obtain an option to co-promote Product with BLS’ Distributor or Sublicensee in the United States and BLS agrees to grant such an option, in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE , in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ACADIA and BLS hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set out in this Article 1 unless the context clearly and unambiguously dictates otherwise.

1.1 “ ACADIA Affiliate ” shall mean any Person that is an Affiliate of ACADIA; provided that , effective upon a Change of Control of ACADIA, the term “ACADIA Affiliate” shall mean only any Person that is, directly or indirectly, through one or more intermediaries, controlled (as such term is defined in Section 1.12) by ACADIA, but for only so long as such control exists.

CONFIDENTIAL

 

1.2 “ ACADIA […***…] Patents ” shall mean all Patents […***…], which Patents are Controlled by ACADIA or any ACADIA Affiliate […***…]. For the avoidance of doubt, ACADIA […***…] Patents shall not include any Joint Patents or Licensed Patents.

1.3 “ ACADIA Indemnitees ” shall have the meaning set forth in Section 11.1.

1.4 “ ACADIA Know-How ” shall mean all Know-How that […***…], which Know-How is Controlled by ACADIA or any ACADIA Affiliate […***…]. For clarification, ACADIA Know-How does not include any proprietary cell-based screening technology of ACADIA such as its receptor selection and amplification technology (R-SAT®) and bioluminescence resonance energy transfer technology (BRET). For the avoidance of doubt, ACADIA Know-How shall not include any Joint Know-How.

1.5 “ ACADIA Patents ” shall mean all Patents that […***…], which Patents are Controlled by ACADIA or any ACADIA Affiliate […***…]. For the avoidance of doubt, ACADIA Patents shall not include any Joint Patents or Licensed Patents. A list of ACADIA Patents as of the Effective Date has been delivered by ACADIA to BLS under separate cover […***…].

1.6 “ ACADIA Studies ” shall mean the two Phase III Clinical Trials (ACP-103-012 and ACP-103-014), the two open label safety extension studies (ACP-103-010 and ACP-103-015) and the preclinical studies for the treatment of PDP, each of which is in progress as of the Effective Date, as described in the PDP Development Plan.

1.7 “ ACADIA Technology ” shall mean all ACADIA Know-How, ACADIA Patents, Licensed Patents and ACADIA’s interest in Joint Patents and Joint Inventions.

1.8 “ Additional Pre-NDA PDP Studies ” shall have the meaning set forth in Section 4.4(b).

1.9 “ Additional Post-NDA PDP Studies ” shall have the meaning set forth in Section 4.4(c).

1.10 “ ADP ” shall mean psychosis in Alzheimer’s disease patients.

 

CONFIDENTIAL

 

1.11 “ ADP Development Plan ” shall mean the plan for development of Product for the prevention or treatment of ADP in the United States as agreed to by the Parties, as may be adopted and amended in accordance with Section 4.1.

1.12 “ Affiliate ” of a Party shall mean any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, as the case may be, but for only so long as such control exists. As used in this Section 1.12, “control” shall mean (i) direct or indirect beneficial ownership of at least 50% (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting share capital or other equity interest in such Person or (ii) the power to direct the management of such Person by contract or otherwise.

1.13 “ Applicable Laws ” shall mean the applicable provisions of any and all national, supranational, regional, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits (including Marketing Approvals) of or from any court, arbitrator, Regulatory Authority or governmental agency or authority having jurisdiction over or related to the subject item.

1.14 “ Auditor ” shall have the meaning set forth in Section 7.5.

1.15 “ Bankruptcy Laws ” shall have the meaning set forth in Section 13.7.

1.16 […***…].

1.17 “ BLS Indemnitees ” shall have the meaning set forth in Section 11.2.

1.18 “ BLS Know-How ” shall mean all Know-How that […***…], which Know-How is Controlled by BLS or any of its Affiliates (other than those that become its Affiliates as a result of a Change of Control of BLS) […***…]. For the avoidance of doubt, BLS Know-How shall not include any Joint Know-How.

1.19 “ BLS Patents ” shall mean all Patents that […***…], which Patents are Controlled by BLS or any of its Affiliates (other than those that become its Affiliates as a result of a Change of Control of BLS) […***…]. For the avoidance of doubt, BLS Patents shall not include any Joint Patents.

1.20 “BLS Technology ” shall mean all BLS Know-How, BLS Patents, and BLS’s interest in Joint Patents and Joint Inventions.

1.21 “ Budget ” shall mean (a) the studies budget included within the applicable Development Plan for conducting the applicable clinical or non-clinical studies or other activities under such Development Plan and/or (b) the regulatory budget within the applicable Development Plan for conducting regulatory activities with respect to Product in the Field in the United States under such Development Plan, as applicable.

 

CONFIDENTIAL

 

1.22 “ Business Day ” shall mean a day other than a Saturday or Sunday or any public holiday in the United States, Barbados or Canada. For the avoidance of doubt, references in this Agreement to “days” shall mean calendar days.

1.23 “ Calendar Quarter ” shall mean a period of 3 consecutive months during a Calendar Year beginning on and including January 1 ^st , April 1 ^st , July 1 ^st or October 1 ^st .

1.24 “ Calendar Year ” shall mean a period of 12 consecutive months beginning on and including January 1 ^st .

1.25 “ Chairman ” shall mean the chairman of the Development Committee.

1.26 “ Change of Control ” shall mean […***…].

1.27 “ CMC ” shall mean chemistry, manufacturing and controls.

1.28 “ Combination Product ” shall mean a Product which comprises 2 or more active pharmaceutical ingredients at least one of which is Pimavanserin.

1.29 “ Commercially Reasonable Efforts ” shall mean that level of efforts and resources, with respect to a particular Party, at the relevant point in time, that is consistent with the usual practice followed by that Party in the exercise of its reasonable scientific and business judgment relating to other prescription pharmaceutical products owned or licensed by it or to which it has exclusive rights, which have market potential and are at a stage of development or product life similar to the applicable Product, taking into account measures of patent coverage, relative safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory structure involved, the relative profitability of the products (including, without limitation, pricing and reimbursement status) and other relevant factors, including without limitation comparative technical, legal, scientific, and/or medical factors.

1.30 “ Commercial Strategy ” shall have the meaning set forth in Section 5.1(a).

1.31 […***…].

1.32 “ Contractors ” shall have the meaning set forth in Section 10.2(j)(i).

 

CONFIDENTIAL

 

1.33 “ Confidential Information ” shall have the meaning set forth in Section 8.1.

1.34 “ Confidentiality Agreement ” shall mean that certain letter agreement dated August 28, 2008 between ACADIA and BLS.

1.35 “ Control ” (including any variations such as “ Controlled ” and “ Controlling ”), in the context of intellectual property rights, Know-How and Confidential Information, shall mean possession (whether by ownership or license, other than pursuant to this Agreement) by a Party of the ability to grant the applicable license under this Agreement, without violating the terms of an agreement with a Third Party.

1.36 “ Co-Promotion Option ” shall have the meaning set forth in Section 5.2.

1.37 “ Costs and Expenses ” shall mean costs and expenses paid to Third Parties (or payable to Third Parties and accrued in accordance with GAAP), other than Affiliates or employees, by either Party.

1.38 “ Development Committee ” shall have the meaning set forth in Section 3.1(a).

1.39 “ Development Expenses ” shall mean Costs and Expenses incurred by a Party or any of its Affiliates in conducting studies and activities in accordance with the applicable Development Plan.

1.40 “ Development Plan ” shall mean the PDP Development Plan or ADP Development Plan or, as applicable, Third Indication Development Plan, and “ Development Plans ” shall mean the PDP Development Plan and the ADP Development Plan and, as applicable, Third Indication Development Plan, collectively.

1.41 “ Development Term ” shall mean the period during which the Parties are conducting studies and activities with respect to Product in the Field for the United States under a Development Plan, commencing on the Effective Date and ending upon the completion of all studies and activities specified in the Development Plans or earlier termination of this Agreement.

1.42 “ Dispute ” shall have the meaning set forth in Section 12.6(a).

1.43 “ Disclosing Party ” shall have the meaning set forth in Section 8.1.

1.44 “ Distribution Agreement ” shall mean an agreement or arrangement between BLS or an Affiliate of BLS and a Distributor with respect to the right of such Distributor to market, promote, advertise, detail, sell and distribute Product in the Territory.

1.45 “ Distributor ” shall mean a Third Party or an Affiliate of BLS to whom BLS or an Affiliate of BLS has granted the right to market, promote, advertise, detail, sell and distribute Product in the Territory.

 

CONFIDENTIAL

 

1.46 “ Effective Date ” shall have the meaning set forth in the opening paragraph of this Agreement.

1.47 “ Escalation Notice ” shall have the meaning set forth in Section 3.4(b).

1.48 “ Excluded Claim ” shall have the meaning set forth in Section 12.6(i).

1.49 “ Expenses ” shall mean the Development Expenses and/or the Regulatory Expenses, as applicable.

1.50 “ FDA ” shall mean the United States Food and Drug Administration or its successor.

1.51 “ Field ” shall mean the prevention or treatment of any psychiatric and neurological Indication and the symptoms associated with these Indications, including but not limited to PDP and ADP.

1.52 “ Filing ” of an NDA shall be deemed to occur on the date of receipt of written notice of acceptance from the FDA in the United States, or other relevant Regulatory Authority outside of the United States, of such NDA for substantive review.

1.53 “ First Commercial Sale ” shall mean, on a country-by-country basis and Product-by-Product basis, the first bona fide , arm’s length sale of a Product in a country following receipt of Marketing Approval of such Product in such country for use or consumption by the general public of such Product in such country. Sales of a Product for registration samples, compassionate use sales, named patient use, inter-company transfers to Affiliates of a Party and the like shall not constitute a First Commercial Sale.

1.54 “ GAAP ” shall mean generally accepted accounting principles in the United States, or internationally, as appropriate, consistently applied and shall mean the international financial reporting standards (“ IFRS ”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that a Party use IFRS.

1.55 “ Good Clinical Practices ” or “ GCP ” shall mean the then-current standards, practices and procedures promulgated or endorsed by the FDA as set forth in the guidelines entitled “Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” including related regulatory requirements imposed by the FDA and comparable regulatory standards, practices and procedures in jurisdictions outside the United States, as they may be updated from time to time.

1.56 “ Good Laboratory Practices ” or “ GLP ” shall mean the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable regulatory standards in jurisdictions outside the United States, as they may be updated from time to time.

1.57 “ Good Manufacturing Practices ” or “ GMP ” shall mean the then-current good manufacturing practices required by the FDA, as set forth in the United States Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated

 

CONFIDENTIAL

 

thereunder, for the manufacture and testing of pharmaceutical materials, and comparable laws or regulations applicable to the manufacture and testing of pharmaceutical materials in jurisdictions outside the United States, as they may be updated from time to time. Good Manufacturing Practices shall include applicable quality guidelines promulgated under the ICH.

1.58 “ Health Canada ” shall mean Health Canada or its successor.

1.59 “ ICC ” shall have the meaning set forth in Section 12.6(a).

1.60 “ ICC Rules ” shall have the meaning set forth in Section 12.6(a).

1.61 “ ICH ” shall mean the International Conference on Harmonization (of Technical Requirements for Registration of Pharmaceuticals for Human Use).

1.62 “ IND ” shall mean an Investigational New Drug Application (including any amendments thereto) filed with the FDA pursuant to 21 C.F.R. §312 before commencement of clinical trials of a pharmaceutical product, or any comparable filings with Health Canada in Canada, including clinical trial applications.

1.63 “ Indemnitee ” shall have the meaning set forth in Section 11.3.

1.64 “ Indemnitor ” shall have the meaning set forth in Section 11.3.

1.65 “ Indication ” shall mean any disease or pathological condition […***…].

1.66 “ Intervening Event ” shall have the meaning set forth in Section 15.1.

1.67 “ Inventions ” shall mean any and all inventions, discoveries, improvements, processes and techniques discovered, conceived or reduced to practice in the course of or as a result of activities under this Agreement, whether or not patentable or included in any claim of patents and patent applications.

1.68 “ Joint Inventions ” shall mean any and all Inventions discovered, conceived or reduced to practice by one or more employees or agents of BLS and/or any of its Affiliates and one or more employees, contractors or agents of ACADIA and/or any ACADIA Affiliate.

1.69 “ Joint Know-How ” shall mean any Joint Invention that is not a Joint Patent.

1.70 “ Joint Patents ” shall mean all Patents claiming any Joint Invention.

1.71 “ Know-How ” shall mean all tangible and intangible scientific, technical, trade, financial or business information and materials, including: (a) cells, cell lines, organisms, animal models, genes, gene fragments, gene sequences and loci, probes, DNA, RNA, cDNA libraries, plasmids, vectors, expression systems, antibodies, proteins, and biological substances, and any constituents, progeny, mutants, derivatives or replications thereof or therefrom; and (b) compounds, solid state forms, compositions of matter,

 

CONFIDENTIAL

 

formulations, techniques, processes, methods, trade secrets, formulae, procedures, tests, data, results, analyses, documentation, reports, information (including pharmacological, toxicological, non-clinical (including chemistry, manufacturing and control)), and clinical test design, methods, protocols, data, results, analyses, and conclusions, quality assurance and quality control information, regulatory documentation, information and submissions pertaining to, or made in association with, filings with any Regulatory Authority, product life cycle management strategies, knowledge, know-how, skill, and experience.

1.72 “ License Agreement ” shall mean […***…].

1.73 “ Licensed Patents ” shall mean all Patents that are […***…], which are Controlled by ACADIA pursuant to the License Agreement. A list of Licensed Patents as of the Effective Date has been delivered by ACADIA to BLS under separate cover, and such list shall be updated from time to time by written agreement between the Parties.

1.74 “ Losses ” shall have the meaning set forth in Section 11.1.

1.75 “ Marketing Approval ” of a Product shall mean all approvals, licenses, registrations or authorizations of Regulatory Authorities in a country necessary for the manufacture, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of such Product in such country. For countries where governmental approval is required for pricing and/or reimbursement for the Product to be reimbursed by national health insurance (or its local equivalent), “Marketing Approval” shall not be deemed to occur until such pricing and/or reimbursement approval is obtained.

1.76 “ Materials ” shall have the meaning set forth in Section 4.11.

1.77 “ Most Recent Milestone ” shall have the meaning set forth in Section 6.2.

1.78 “ NDA ” of a Product shall mean a New Drug Application as defined in Title 21 of the U.S. Code of Federal Regulations, Section 314.80, et seq., and all amendments and supplements thereto, which is filed with the FDA, or the equivalent application filed with Health Canada in Canada, including all documents, data, and other information concerning such Product thus filed that are necessary for gaining Marketing Approval for such Product.

1.79 “ Net Sales ” shall mean […***…].

 

CONFIDENTIAL

 

In no event shall any particular amount, identified above, be deducted more than once in calculating Net Sales (i.e., no “double counting” of reductions). Sales of Product between BLS and its Affiliates, Distributors or Sublicensees for resale shall be excluded from the computation of Net Sales, but the subsequent resale of such Product to a Third Party shall be included within the computation of Net Sales. Notwithstanding anything to the contrary herein, sale, disposal or use of Product for marketing, regulatory, development or charitable purposes, such as clinical trials, preclinical trials, compassionate use, named patient use, or indigent patient programs, without consideration, shall not be deemed a sale hereunder.

In the event that a Product is sold in the form of a Combination Product, Net Sales of the Combination Product shall be determined by multiplying actual Net Sales of the Combination Product (determined by reference to the definition of Net Sales set forth above) during the Calendar Quarter period by the fraction A/(A+B) where A is the average sale price of the Product when sold separately in finished form, and B is the average sale price of the other active ingredients or components when sold separately in finished form, in each case during the applicable reporting Calendar Quarter in the country in which the sale of the Combination Product was made, or if sales of both the Product and the other active ingredients or components did not occur in such period, then in the most recent Calendar Quarter in which sales of both occurred. If the other active ingredient or component in the Combination Product is not sold separately in said country, Net Sales of the Combination Product shall be determined by multiplying actual Net Sales of such Combination Product (determined by reference to the definition of Net Sales set forth above) during the Calendar Quarter period by the fraction A/D, where A is the average sale price of the Product when sold separately in finished form, and D is the average sale price of the Combination Product. If neither the Product nor the other active ingredient or component in the Combination Product is sold separately in a given country, the Parties shall determine Net Sales for such Combination Product by mutual agreement based on the relative contribution of the Product and the other active ingredients or components in the Combination Product.

1.80 “ Notice Date ” shall have the meaning set forth in Section 12.6(b).

 

CONFIDENTIAL

 

1.81 “ Panel ” shall have the meaning set forth in Section 12.6(b).

1.82 “ Paragraph IV Notice ” shall have the meaning set forth in Section 9.7.

1.83 “ Party ” shall mean ACADIA or BLS individually, and “ Parties ” shall mean ACADIA and BLS collectively.

1.84 “ Patent(s) ” shall mean (a) all patents, certificates of invention, applications for certificates of invention, priority patent filings and patent applications, and (b) any renewal, division, continuation (in whole or in part), or request for continued examination of any of such patents, certificates of invention and patent applications, and any all patents or certificates of invention issuing thereon, and any and all reissues, reexaminations, extensions, divisions, renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing.

1.85 “ Patent Term Extension ” means any term extensions, supplementary protection certificates, regulatory exclusivity and equivalents thereof offering patent protection beyond the initial term with respect to any issued Patents.

1.86 “ Payment Report ” shall have the meaning set forth in Section 4.8(b).

1.87 “ PDP ” shall mean psychosis in Parkinson’s disease patients.

1.88 “ PDP Development Plan ” shall mean the plan for development of Product for the prevention or treatment of PDP in the United States as agreed to by the Parties, as may be amended in accordance with Section 4.1. A copy of the PDP Development Plan as of the Effective Date has been delivered by ACADIA to BLS under separate cover.

1.89 “ Person ” shall mean any individual, corporation, partnership, limited liability company, trust, governmental entity, or other legal entity of any nature whatsoever.

1.90 “ Permitted Licensees ” shall mean (i) licensees of any of ACADIA’s rights to Pimavanserin outside the Territory and/or (ii) licensees of any of ACADIA’s rights to Pimavanserin outside the Field in the Territory, as the case may be.

1.91 “ Phase II Clinical Trial ” shall mean a human clinical trial, the principal purpose of which is to gather an initial assessment of safety and efficacy of one or more particular doses in patients being studied, as required in 21 C.F.R. §312(b), or such similar clinical study in a country other than the United States.

1.92 “ Phase III Clinical Trial ” shall mean a human clinical trial, the principal purpose of which is to gather safety and efficacy data of one or more particular doses in patients being studied that is needed to evaluate the overall benefit and risk relationship of the product and to provide adequate basis for labeling, as required in 21 C.F.R. §312(c), or such similar clinical study in a country other than the United States.

 

CONFIDENTIAL

 

1.93 “ Pimavanserin ” shall mean an active pharmaceutical ingredient that is a compound, the structure of which compound has been disclosed by ACADIA to BLS under separate cover, […***…] (previously referred to as ACP-103 by ACADIA).

1.94 “ Product ” shall mean any pharmaceutical product containing Pimavanserin, alone or in combination with one or more other active pharmaceutical ingredients, in any dosage form or formulation.

1.95 […***…].

1.96 “ Quarterly Report ” shall have the meaning set forth in Section 4.8(b).

1.97 “ Receiving Party ” shall have the meaning set forth in Section 8.1

1.98 “ Regulatory Authority ” shall mean any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval is necessary for the manufacture, packaging, use, storage, import, export, distribution, promotion, marketing, offer for sale and sale of Product. For countries where governmental approval is required for pricing or reimbursement for Product to be reimbursed by national health insurance (or its local equivalent), “Regulatory Authority” shall also include any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review and/or approval of pricing or reimbursement is required.

1.99 “ Regulatory Expenses ” shall mean Costs and Expenses incurred by a Party or any of its Affiliates in conducting regulatory activities in accordance with the applicable Development Plan with respect to Product in the Field for the United States.

1.100 “ Regulatory Filings ” shall mean all applications, approvals, licenses, registrations, notifications, registrations, submissions and authorizations made to or received from a Regulatory Authority in a country necessary for the development, manufacture and/or commercialization of a pharmaceutical product, including any INDs, NDAs and Marketing Approvals.

1.101 “ Responsible Party ” shall mean the Party designated as responsible for conducting the applicable clinical or non-clinical studies or other activities under the applicable Development Plan or designated by the Development Committee as responsible for filing and securing Marketing Approval for Product in the Field in the United States, as applicable.

1.102 “ Royalty Report ” shall have the meaning set forth in Section 7.1.

1.103 “ Royalty Term ” shall have the meaning set forth in Section 6.3(c).

 

CONFIDENTIAL

 

1.104 “ SEC ” shall have the meaning set forth in Section 8.5(a).

1.105 “ Section 13.4(d)(i) Licensed Patents ” shall have the meaning set forth in Section 13.4(d)(i).

1.106 “ Section 13.5(g)(i) Licensed Patents ” shall have the meaning set forth in Section 13.5(g)(i).

1.107 “ Senior Executives ” shall have the meaning set forth in Section 3.4(b).

1.108 […***…].

1.109 “ Sublicensee ” shall mean a Third Party or an Affiliate of BLS, other than a Distributor, to whom BLS or an Affiliate of BLS has granted a sublicense under the ACADIA Technology to make, have made, use, offer for sale, sell and/or import Pimavanserin or Product in the Field in any country in the Territory as contemplated by Section 2.3(a) of this Agreement. For clarity, the term “Sublicensee” shall not include (i) any whole sellers or importers that are not granted any sublicense under the ACADIA Technology to make, have made, use, offer for sale, sell and/or import Pimavanserin or Product in the Field in the Territory or (ii) any contract manufacturers that are granted only the right to manufacture Pimavanserin or Product in the Field in the Territory solely for use by BLS or its Affiliates, Distributors or Sublicensees.

1.110 “ Term ” shall have the meaning set forth in Section 12.1

1.111 “ Territory ” shall mean Canada and the United States.

1.112 “ Third Indication ” shall mean an Indication in the Field, other than PDP and ADP.

1.113 “ Third Indication Development Plan ” shall mean the plan for development of Product for the prevention or treatment of a Third Indication in the United States as agreed to by the Parties, as may be adopted and amended in accordance with Section 4.1.

1.114 “ Third Party ” shall mean any Person other than ACADIA, BLS and their respective Affiliates.

1.115 “ Third Party Claims ” shall have the meaning set forth in Section 11.1.

1.116 “ United States ” or “ U.S. ” shall mean the United States of America, including its territories and possessions and the District of Columbia.

1.117 “ Valid Claim ” shall mean (a) an unexpired claim of an issued patent which has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (b) a claim of a pending application, which application claims a first priority no more than […***…] years prior to the date upon which pendency is determined.

 

CONFIDENTIAL

 

1.118 “ Wind-down Period ” shall mean any period after the date of termination of this Agreement, in its entirety or on a country-by-country basis, during which Parties are required to wind-down development activities pursuant to Section 13.4(a), 13.5(a) or 13.6(a), as the case may be.

1.119 “ Withdrawal Notice ” shall have the meaning set forth in Section 3.2(b).

ARTICLE 2

GRANT OF LICENSE

2.1 R&D Licenses; Manufacturing License Outside the Territory.

(a) Subject to the terms and conditions of this Agreement, ACADIA hereby grants to BLS (i) a non-exclusive, royalty-free license, with the right to grant sublicenses to its Affiliates and Sublicensees, under such ACADIA Know-How, ACADIA […***…] Patents and Licensed Patents as are necessary for BLS, its Affiliates and Sublicensees to perform, or have performed, studies and regulatory activities with respect to Pimavanserin and Product in the Field, solely to perform or have performed such studies and regulatory activities with respect to Pimavanserin and Product […***…] and (ii) a non-exclusive, royalty-free license, with the right to sublicense to its Affiliates, under ACADIA Know-How, ACADIA […***…] Patents and Licensed Patents solely to make or have made Pimavanserin and Product […***…]. ACADIA shall not grant any right or license under ACADIA Know-How, ACADIA […***…] Patents and Licensed Patents to any Third Party either (A) to perform any studies and regulatory activities with respect to Pimavanserin and Product or (B) to make or have made Pimavanserin and Product outside the Territory, in each case for developing or commercializing Pimavanserin and Product in the Field in the Territory during the Term.

(b) Subject to the terms and conditions of this Agreement, BLS hereby grants (or with respect to BLS Technology Controlled by its Affiliates, causes its Affiliates to grant) to ACADIA (i) a non-exclusive, worldwide, royalty-free license, with the right to sublicense to its Affiliates, under such BLS Technology as is necessary for performing studies and regulatory activities to be performed by ACADIA under the Development Plans, solely to perform such studies and regulatory activities pursuant to the Development Plan during the Development Term for obtaining Marketing Approval of Product in the Field in the Territory and (ii) a non-exclusive, worldwide, royalty-free license, with the right to sublicense only to ACADIA’s Affiliates and Permitted Licensees, under such BLS Technology as is necessary to perform studies and regulatory activities with respect to Pimavanserin and Product, solely to perform such studies and regulatory activities for obtaining Marketing Approval of Product outside the Territory during the Term.

 

CONFIDENTIAL

 

2.2 License to BLS. Subject to the terms and conditions of this Agreement, ACADIA hereby grants to BLS a royalty-bearing license, with the right to grant sublicenses as provided in Section 2.3, under the ACADIA Technology, to make, have made, use, sell, offer for sale and import Pimavanserin and Product in the Field in the Territory. The license granted in this Section 2.2 shall be exclusive even as to ACADIA, except with respect to (i) ACADIA’s performance of studies and regulatory activities pursuant to the Development Plan during the Development Term, […***…] (v) ACADIA’s Co-Promotion Option exercised in accordance with Section 5.2. The license granted in this Section 2.2 under the Licensed Patents is granted only to the extent of the rights under the Licensed Patents granted to ACADIA under the License Agreement and is granted subject to the terms of the License Agreement.

2.3 Distribution Agreements; Sublicenses.

(a) Right to Sublicense. BLS shall have the right to sublicense any or all rights granted to it under Section 2.2 in any country in the Territory (i) to any of its Affiliates; and (ii) to a Third Party Distributor or Third Party Sublicensee.

(b) Distribution Agreements; Sublicenses. Any Distribution Agreement or sublicense shall be in writing and, with the exception of the financial terms, be consistent with the terms of this Agreement (except that any Third Party Distributor or Third Party Sublicensee shall not have the right to further sublicense). BLS shall be responsible for the acts or omissions of Distributors or Sublicensees in exercising rights under the Distribution Agreements or sublicenses, as the case may be, which would constitute a breach hereunder. Within 10 days after execution and receipt of a Distribution Agreement or a sublicense with a Third Party, BLS shall provide ACADIA with a full and complete copy of each Distribution Agreement or sublicense with such Third Party granted hereunder (provided that BLS may redact any confidential information contained therein that is not necessary to disclose to ensure compliance with this Agreement) and shall deliver copies of all reports (including relating to royalties and other payments) relating to Product received by BLS from Distributors and Sublicensees.

(c) […***…].

 

CONFIDENTIAL

 

2.4 Rights Reserved; Additional License Grant to ACADIA.

(a) Rights Reserved. Except for the rights and licenses expressly granted in this Agreement, ACADIA retains all rights under its intellectual property, including the ACADIA Technology and ACADIA […***…] Patents, and BLS retains all rights under its intellectual property, including BLS Technology, and no rights shall be deemed granted by one Party to the other Party by implication, estoppel or otherwise. Without limiting the foregoing, ACADIA reserves and retains all rights to the ACADIA Technology and ACADIA […***…] Patents not granted to BLS pursuant to Section 2.1(a) or 2.2, including the rights to conduct the activities contemplated under Section 2.2(i) through (v). BLS agrees not to practice any ACADIA Technology and ACADIA […***…] Patents except pursuant to any license expressly granted to BLS in this Agreement or any other written agreement between the Parties. ACADIA agrees not to practice any BLS Technology except pursuant to any license expressly granted to ACADIA in this Agreement or any other written agreement between the Parties.

(b) Additional License Grant to ACADIA.

(i) BLS hereby grants (or causes its Affiliates to grant) to ACADIA a non-exclusive, royalty-free license, […***…], under only such BLS Patents as necessary for the manufacture, use, sale, offer for sale and/or importation of Pimavanserin or Product outside the Territory, […***…] solely to make, have made, use, sell, offer for sale and import Pimavanserin and Product outside the Territory.

(ii) BLS will grant to ACADIA (or will cause its Affiliates to grant), […***…], a non-exclusive license, […***…] (to the extent permitted by BLS’s agreements with Third Parties), under (x) BLS Patents not owned by BLS or its Affiliates (to the extent permitted by BLS’s agreements with Third Parties), and (y) BLS Patents owned by BLS or its Affiliates that are not included in the license granted under Section 2.4(b)(i), in each case only to the extent necessary for the manufacture, use, sale, offer for sale and/or importation of Pimavanserin and Product outside the Territory, to make, have made, use, sell, offer for sale and import Pimavanserin and Product outside the Territory.

2.5 Mutual Covenant.

(a) Mutual Covenant. During the Term, each Party hereby covenants […***…], in the Territory. In addition, […***…] during the Term, each Party hereby covenants […***…]; provided however, […***…], then such restriction shall not be applicable.

 

CONFIDENTIAL

 

(b) […***…] . Notwithstanding Section 2.4(b)(a), in the event that […***…].

ARTICLE 3

GOVERNANCE

3.1 Development Committee.

(a) Establishment. Within 30 days following the Effective Date, ACADIA and BLS shall establish a joint development committee (“ Development Committee ”) to oversee, review and coordinate the activities of the Parties under this Agreement with regard to development and regulatory approval of Product in the Field in the United States, which Development Committee shall be disbanded upon termination or expiration of the Development Term.

 

CONFIDENTIAL

 

(b) Duties. The Development Committee shall:

(i) review, coordinate, and discuss the overall development and regulatory strategies for commercializing Product in the Field in the United States;

(ii) review and approve the Development Plans and material changes to the Development Plans, including Budgets contained therein;

(iii) determine whether ACADIA or BLS will be responsible for conducting the clinical and preclinical studies and activities for obtaining Marketing Approval for Product in the Field in the United States, other than the ACADIA Studies;

(iv) subject to and within the parameters of the Development Plans, oversee the implementation of the Development Plans, including assigning roles, responsibilities, timelines and budgets for activities based upon the Development Plans;

(v) provide a forum for presentation by BLS to ACADIA of a proposal for an Indication within the Field other than ADP and PDP to be pursued in the Territory under this Agreement, as the Third Indication or otherwise;

(vi) determine the course of action with regard to any proposal by BLS to develop a Product in a Third Indication in the Territory;

(vii) determine whether ACADIA or BLS will be responsible for conducting the regulatory activities for obtaining Marketing Approval for Product in the Field in the United States and oversee the conduct of such regulatory activities;

(viii) provide a forum for resolving matters to submitted by any subcommittee of the Development Committee;

(ix) provide a forum for the Parties to exchange information and coordinate their respective activities with respect to development, regulatory and manufacturing matters pertaining to Product in the Territory and outside the Territory; and

(x) perform such other duties as are specifically assigned by the Parties to the Development Committee pursuant to this Agreement.

3.2 Development Committee Membership.

(a) Membership. Subject to Section 3.2(b), the Development Committee shall be composed of […***…] members, […***…] of whom shall be nominated by ACADIA and […***…] of whom shall be nominated by BLS; provided that […***…] individual to serve as the Chairman of the Development Committee. The Chairman shall have no voting power, except that, in the event of a deadlock between the voting members of the Development Committee, the Chairman shall have the tie-breaking vote, as provided in Section 3.4. Any member of the Development Committee may designate a substitute to attend and perform the functions of that member at any meeting of the Development Committee. Each Party may, with the consent of the other Party, such consent not to be unreasonably withheld or delayed, invite non-member, non-voting representatives of such Party to attend meetings of the Development Committee.

 

CONFIDENTIAL

 

(b) Withdrawal. At any time during the Term and for any reason, ACADIA shall have the right to withdraw from participation in the Development Committee upon written notice to BLS, which notice shall be effective immediately upon receipt (“ Withdrawal Notice ”). Following the issuance of a Withdrawal Notice and subject to this Section 3.2(b), ACADIA’s representatives to the Development Committee shall not participate in any meetings of the Development Committee, nor shall ACADIA have any right to vote on decisions within the authority of the Development Committee. If, at any time, following the issuance of a Withdrawal Notice, ACADIA wishes to resume participation in the Development Committee, ACADIA shall notify BLS in writing and, thereafter, ACADIA’s representatives to the Development Committee shall be entitled to attend any subsequent meeting of the Development Committee and to participate in the activities of, and decision-making by, the Committees as provided in this Article 3 as if a Withdrawal Notice had not been issued by ACADIA. Following ACADIA’s issuance of a Withdrawal Notice, unless and until ACADIA resumes participation in the Development Committee in accordance with this Section 3.2(b): (i) all meetings of the Development Committee shall be held at BLS’s facilities; (ii) BLS shall have the right to make the final decision on all matters within the scope of authority of the Development Committee; and (iii) ACADIA shall have the right to continue to receive the minutes of the Development Committee meetings, but shall not have the right to approve the minutes for any Development Committee meeting held after ACADIA’s issuance of a Withdrawal Notice. For clarity, if ACADIA withdraws and then resumes participation in the Development Committee, it shall not have any right to retroactively review or modify any decision made by the Development Committee during ACADIA’s withdrawal period.

3.3 Meetings. All Development Committee meetings shall be held as often as the members may determine, but in any event Development Committee meetings shall occur not less than once per Calendar Quarter. Such meetings may be held in person, or by any means of telecommunications or video conference, as the members deem necessary or appropriate; provided, however, that at least one Development Committee meeting per year shall be held in person and the location of such in-person meeting shall alternate between ACADIA’s and BLS’s offices in Barbados. The first meeting shall be held at BLS’s offices in Barbados. A quorum for Development Committee meetings shall be […***…] members, with at least […***…] members from each Party.

3.4 Decision-making of Development Committee.

(a) Vote Required. The Development Committee may make decisions with respect to any subject matter that is within the purview of the Development Committee’s duties. Except as expressly provided in this Agreement, all decisions of the Development Committee shall be made by unanimous vote or written consent, with ACADIA and BLS each having, respectively, one vote in all decisions. The Development Committee shall use reasonable efforts to resolve any disputes concerning the matters within its duties.

 

CONFIDENTIAL

 

If, with respect to a matter that is subject to the Development Committee’s duties and does not involve approval of […***…], the Development Committee cannot reach consensus, then the Chairman of the Development Committee shall cast the deciding vote on such matter (which shall become the decision of the Development Committee).

(b) Development Plan Dispute. If, with respect to a matter that is within the Development Committee’s duties and involves approval of […***…], the Development Committee cannot reach consensus within 15 days after it has met and attempted to reach such consensus, then either Party may, by written notice to the other Party (an “ Escalation Notice ”), have such matter referred for resolution to, on behalf of ACADIA, the Chief Executive Officer of ACADIA and to, on behalf of BLS, the President of BLS (collectively, the “ Senior Executives ”). The Senior Executives shall use good faith efforts to resolve the matter referred to them with 15 days of such referral. If, despite such good faith efforts, the Senior Executives are unable to resolve such matter within 30 days of the date of any Escalation Notice, then upon the written request of either Party, […***…].

(c) Decision by Development Committee. For all purposes under this Agreement, any decision made pursuant to Section 3.4(a) or 3.4(b) shall be deemed to be the decision of the Development Committee.

(d) Limitations. Notwithstanding this Section 3.4, any dispute regarding the interpretation of this Agreement or any alleged breach of this Agreement shall be resolved in accordance with the terms of Article 14.

3.5 Minutes. Minutes for each of the Development Committee meetings shall be prepared by an ACADIA member or a BLS member of the Development Committee alternately, with BLS’s member preparing the minutes for the first meeting of the Development Committee. The draft minutes shall be sent to all members of the Development Committee for comment promptly after each such meeting (but in no event more than 15 days after each such meeting). All actions noted in the minutes shall be reviewed and approved at subsequent meetings of the Development Committee; provided that if the Parties cannot agree as to the content of the minutes by the time the Development Committee next meets, such minutes shall be finalized to reflect any areas of disagreement.

3.6 Expenses. Each Party shall bear its own costs, including expenses incurred by the members nominated by it in connection with their activities as members of the Development Committee or as Chairman.

3.7 Subcommittees. From time to time, the Development Committee may establish subcommittees to oversee particular projects or activities within the scope of authority of the Development Committee, as it deems necessary or advisable. Each subcommittee shall consist of such number of representatives of each Party as the Development Committee determines is appropriate from time to

 

CONFIDENTIAL

 

time and shall meet with such frequency as the Development Committee shall determine. All decisions of each subcommittee shall be made by unanimous vote or written consent, with ACADIA and BLS each having, collectively, one vote in all decisions. If, with respect to a matter that is subject to a subcommittee’s decision-making authority, the subcommittee cannot reach unanimity, the matter shall be referred to the Development Committee, which shall resolve such matter in accordance with Section 3.4.

3.8 Scope of Governance. Notwithstanding the creation of the Development Committee or any subcommittee, each Party shall retain the rights, powers and discretion granted to it hereunder, and neither the Development Committee nor any subcommittee shall be delegated or vested with rights, powers or discretion unless such delegation or vesting is expressly provided herein, or the Parties expressly so agree in writing. Neither the Development Committee nor any subcommittee shall have the power to amend or modify this Agreement, and no decision of the Development Committee or any subcommittee shall be in contravention of any terms and conditions of this Agreement. It is understood and agreed that issues to be decided by the Development Committee or any subcommittee, as applicable, are only those specific issues within the Development Committee’s duties. Any issues with respect to development of Product in the Field that relate solely to obtaining Marketing Approval in Canada or the commercialization of Product in the Field in the Territory shall be decided solely by BLS.

ARTICLE 4

DEVELOPMENT AND REGULATORY ACTIVITIES

4.1 Development Plans. The Parties have agreed to the initial PDP Development Plan (including a Budget contained therein) and the timeline, Budget and outline for the ADP Development Plan, which have been delivered by ACADIA to BLS under separate cover. The PDP Development Plan will include the ACADIA Studies and such additional studies, including preclinical and clinical studies, as are required by the FDA to secure Marketing Approval of Product for the treatment of PDP in the United States by the FDA, […***…], and a related Budget for such studies and activities. The Development Committee shall review and consider the Development Plans and any changes to the Development Plans on an ongoing basis, and in no event less frequently than once each half of a Calendar Year. All material changes to the Development Plans shall be subject to approval by the Development Committee.

4.2 Conduct of Development Activities.

(a) Compliance with Development Plan and Applicable Laws. All development and regulatory activities for obtaining Marketing Approval of Product in the Field in the United States shall be conducted by and on behalf of the Parties in accordance with the Development Plans and the other provisions of this Agreement. Each Party shall conduct the development activities for which it is the Responsible Party under the Development Plans in accordance with the Development Plans (including applicable Budget contained therein) and this Agreement. Each Party shall conduct those activities for which it is the Responsible Party under the Development Plans in compliance in all material respects with all Applicable Laws and in accordance with GLP and GCP under the

 

CONFIDENTIAL

 

Applicable Laws of the country in which such activities are conducted. BLS shall conduct development and regulatory activities for obtaining Marketing Approval of Product in the Field in Canada in accordance with this Agreement and in compliance in all material respects with all Applicable Laws and in accordance with GLP and GCP under the Applicable Laws of the country in which such activities are conducted. In the event the Parties agree that ACADIA shall conduct any studies and other activities other than ACADIA Studies […***…], for an amount of payment, and according to a payment schedule, agreed to by the Parties in writing, ACADIA shall conduct such studies and other activities in accordance with the Parties’ agreement and in compliance in all material respects with all Applicable Laws and in accordance with GLP and GCP under the Applicable Laws of the country in which such activities are conducted.

(b) Diligence. The Responsible Party shall use Commercially Reasonable Efforts to conduct and complete the studies and activities assigned to it in the Development Plans in order to achieve the goals of the Development Plans in accordance with the timelines specified therein. Without limiting the foregoing, each Party shall proceed diligently and in a timely manner with respect to the studies and activities for which it is the Responsible Party under the Development Plan by using its good faith efforts to allocate sufficient time, effort, equipment and facilities to such development activities and to use personnel with sufficient skills and experience as are required to accomplish such studies and activities in accordance with the Development Plans and the terms of this Agreement.

(c) Information Regarding Development Activities. Each Party shall maintain records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved by or on behalf of such Party in the performance of its development activities under this Agreement. Each Party shall keep the Development Committee appropriately informed of the status of clinical and preclinical studies and other activities with respect to Product in the Field conducted under the Development Plans and BLS shall keep ACADIA informed of such studies and activities during any period that ACADIA has withdrawn from the Development Committees pursuant to Section 3.2(b). Upon request by the Development Committee, without limiting the foregoing, each Party shall promptly provide the Development Committee with summaries of data and results and, if requested by the Development Committee, all supporting data and results generated or obtained in the course of such Party’s performance of studies and activities under the Development Plans. In addition, BLS shall keep ACADIA informed of studies and activities conducted for obtaining Marketing Approval of Product in the Field in Canada, and, upon request by ACADIA, without limiting the foregoing, BLS shall promptly provide ACADIA with summaries of data and results generated or obtained in the course of BLS’s performance of such studies and activities. For clarity, the foregoing provision shall not limit ACADIA’s right to receive data pursuant to Section 4.7(g). Upon reasonable prior written notice, BLS shall have the right to inspect records and notebooks reflecting the work done and results achieved by or on behalf of ACADIA or its Affiliates in the performance of ACADIA’s development activities with respect to Pimavanserin and Product in the Field pursuant to the Development Plans.

 

CONFIDENTIAL

 

4.3 ACADIA Studies. Subject to Section 4.2 and except as otherwise mutually agreed, ACADIA shall conduct the ACADIA Studies in accordance with the PDP Development Plan with oversight by the Development Committee. ACADIA shall be the Responsible Party with respect to the ACADIA Studies and shall bear all Development Expenses of the ACADIA Studies, unless otherwise provided in the PDP Development Plan or mutually agreed by the Parties.

4.4 Other Development Activities in PDP.

(a) Other Development Activities. With regard to all clinical and preclinical studies and other activities under the PDP Development Plan, other than the ACADIA Studies, the PDP Development Plan shall specify which Party shall be the Responsible Party with respect to conducting such studies and activities with oversight by the Development Committee. The PDP Development Plan shall also specify which Party shall be the Responsible Party with respect to conducting CMC studies and technology transfer for the manufacture and supply of the active pharmaceutical ingredient for Product and finished Product for the prevention or treatment of PDP in the Territory with oversight by the Development Committee, and the Budget for such activities. Whether BLS or ACADIA is the Responsible Party for conducting studies or other activities under the PDP Development Plan, except as otherwise provided in this Section 4.4(a) or in Section 4.4(b) or 4.4(c), BLS shall be responsible for funding all studies (other than the ACADIA Studies, with the exception of any such studies where the Parties have mutually agreed under the PDP Development Plan and applicable Budget to share costs) and other activities under the PDP Development Plan and all studies and other activities for obtaining Marketing Approval of Product in the Field in Canada, including but not limited to the CMC studies, safety and drug interaction studies and technology transfer activities, in accordance with Section 4.8(a)(i). […***…].

(b) Additional Pre-NDA PDP Studies. In the event that the Development Committee determines that […***…] additional pivotal Phase III Clinical Trials of Product for the prevention or treatment of PDP are required in order to file an NDA for Product for the prevention or treatment of PDP with the FDA (the “ Additional Pre-NDA PDP Studies ”), then BLS shall have the option, which it may exercise upon written notice to ACADIA […***…] following such determination by the Development Committee, to do one of the following:

(i) participate with ACADIA in the Additional Pre-NDA PDP Studies, subject to amendment of the PDP Development Plan by the Development Committee to define such additional studies, including the Responsible Party and Budget for such additional studies, which Additional Pre-NDA PDP Studies shall be funded by BLS in accordance with Section 4.8(a)(i);

 

CONFIDENTIAL

 

(ii) terminate this Agreement […***…], with the effect set forth in Sections 13.2 and 13.4; or

(iii) proceed with other arrangements as agreed in writing by the Parties, after negotiating in good faith, to maximize the commercial opportunity for the Product;

provided, however, if no written notice is provided to ACADIA within such 90-day period, then BLS shall be deemed to have selected the option outlined in the foregoing clause (i).

(c) Additional Post-NDA PDP Studies. In the event that an NDA for Product for the prevention or treatment of PDP has been filed with the FDA, but the FDA does not approve such NDA and requests that additional studies of Product for the prevention or treatment of PDP be conducted (the “ Additional Post-NDA PDP Studies ”), then BLS shall have the option, which it may exercise upon written notice to ACADIA […***…] following such determination by the Development Committee, to do one of the following:

(i) participate with ACADIA in the Additional Post-NDA PDP Studies, subject to amendment of the PDP Development Plan by the Development Committee to define such additional studies, including the Responsible Party and Budget for such additional studies, which Additional Post-NDA PDP Studies shall be funded by BLS in accordance with Section 4.8(a)(i);

(ii) terminate this Agreement […***…], with the effect set forth in Sections 13.2 and 13.4; or

(iii) proceed with other arrangements as agreed in writing by the Parties, after negotiating in good faith, to maximize the commercial opportunity for the Product;

provided, however, if no written notice is provided to ACADIA within such […***…], then BLS shall be deemed to have selected the option outlined in the foregoing clause (i).

4.5 Development Activities in ADP.

(a) First Clinical Trial. […***…], the Parties shall initiate a […***…] Trial of Product, as determined by the Development Committee, for the prevention or treatment of ADP pursuant to the ADP Development Plan approved by the Development Committee. Such clinical trial shall be designed based on a commercially reasonable assessment of the then-available data and described in the ADP Development Plan. The ADP Development Plan shall specify which Party shall be the Responsible Party with respect to conducting such clinical trial with oversight by the Development Committee. Each Party shall conduct such clinical trial in accordance with the ADP Development Plan (including the applicable Budget contained therein), and BLS shall be responsible for funding such clinical trial under the ADP Development Plan.

 

CONFIDENTIAL

 

(b) Additional Studies After First Clinical Trial. Following the completion of, and receipt of results for such first clinical trial for ADP, BLS shall have the option, which it may exercise upon written notice to ACADIA […***…], to do one of the following:

(i) continue to develop, fund and seek regulatory approval for Product for the prevention or treatment of ADP in the Territory, including to conduct such studies and other activities required in order to file an NDA or label extension for Product for the prevention or treatment of ADP with the FDA, subject to amendment of the ADP Development Plan by the Development Committee to define such additional studies and activities (including CMC studies and technology transfer for the manufacture and supply of the active pharmaceutical ingredient for Product and finished Product for the prevention or treatment of ADP in the Territory), including the Responsible Party and Budget for such additional studies and activities, which studies and activities shall be funded by BLS in accordance with Section 4.8(a)(i);

(ii) terminate this Agreement […***…], with the effect set forth in Sections 13.3 and 13.4; or

(iii) proceed with other arrangements as agreed in writing by the Parties, after negotiating in good faith, to maximize the commercial opportunity for the Product;

provided, however, if no written notice is provided to ACADIA within such […***…], then BLS shall be deemed to have selected the option outlined in the foregoing clause (i).

4.6 Development Activities in Third Indication. BLS shall have the right, but not the obligation, to develop a Product in a Third Indication for use in the Territory. If BLS elects to pursue development of Product in a Third Indication for use in the Territory, it shall notify the Development Committee and the Development Committee shall determine the course of action. The Development Committee shall establish the Third Indication Development Plan describing which preclinical and clinical studies and other activities are required in order to file an NDA or label extension for Product for the prevention or treatment of the Third Indication with the FDA (including CMC studies and technology transfer for the manufacture and supply of the active pharmaceutical ingredient for Product and finished Product for the prevention or treatment of the Third Indication in the Territory). Each Party shall conduct such studies and activities in accordance with the Third Indication Development Plan (including the applicable Budget contained therein), and BLS shall be responsible for funding all studies and activities under the Third Indication Development Plan in accordance with Section 4.8(a)(i).

4.7 Regulatory Activities.

(a) Conduct of Regulatory Activities. All regulatory activities for obtaining Marketing Approval of Product in the Field in the Territory shall be conducted by and on behalf of the Parties in compliance with the provisions of this Agreement. Each Party shall conduct all of those regulatory activities for which it is the Responsible Party, and BLS shall conduct all of those regulatory

 

CONFIDENTIAL

 

activities for obtaining Marketing Approval of Product in the Field in Canada, in compliance in all material respects with all Applicable Laws of the country in which such activities are conducted. ACADIA may not conduct any development (including regulatory) activities with respect to any Product in the Field in the Territory without BLS’s prior written consent, which consent shall not be unreasonably withheld, except pursuant to a Development Plan. Upon request by the Responsible Party, the other Party shall provide reasonable assistance to the Responsible Party in relation to the performance by the Responsible Party of such regulatory activities under this Agreement.

(b) United States. The Development Committee shall designate which Party shall be the Responsible Party with respect to filing the NDA for Product in the applicable Indication in the Field in the United States and obtaining Marketing Approval for Product in such Indication in the Field in the United States with oversight by the Development Committee, which designations shall be set forth in the applicable Development Plan. Each Party shall conduct such regulatory activities for which it is the Responsible Party in accordance with the Development Plan (including the Budget set forth therein) and shall use Commercially Reasonable Efforts to obtain Marketing Approval in the Field in the United States, and BLS shall be responsible for funding all regulatory activities for obtaining Marketing Approval in the United States in accordance with Section 4.8(a)(i). In the event that ACADIA is the Responsible Party for such regulatory activities with respect to Product in an Indication in the Field in the United States, (i) ACADIA shall inform FDA that one representative of BLS will attend meetings between ACADIA and FDA and shall timely inform BLS of any such scheduled meetings as soon as practicably possible and (ii) within […***…] days after receipt of a Marketing Approval, ACADIA shall transfer to BLS […***…], such Marketing Approval for such Indication in the Field to enable BLS to manage the commercialization and any additional development of Product in such Indication in the Field in the Territory. Except as may be required by Applicable Laws, ACADIA shall not communicate regarding development or regulatory matters relating to Pimavanserin or any Product in the Field with any Regulatory Authority in the Territory unless explicitly provided for in a Development Plan or requested or permitted in writing to do so by BLS or unless so ordered by such Regulatory Authority in the Territory, in which case ACADIA shall immediately notify BLS of such order or shall seek permission for BLS to participate in such communication, which shall not be unreasonably withheld or delayed. In addition to the information required to be provided to the other Party in other provisions of this Agreement, BLS shall timely provide ACADIA with summaries of its communications and correspondence with the Regulatory Authorities in the Territory with respect to safety and manufacturing issues with respect to Pimavanserin or Product for use in the Field in the Territory and ACADIA shall timely provide BLS with summaries of its communications and correspondence with the Regulatory Authorities in the Territory with respect to safety and manufacturing issues with respect to Pimavanserin or Product for use outside the Field in the Territory.

(c) Canada. BLS may, at its sole discretion, file for and obtain Marketing Approval for Product in the Field in Canada. BLS shall be solely responsible with respect to such regulatory activities and shall bear all expenses associated with all such regulatory activities. ACADIA shall provide all reasonable assistance necessary to BLS in respect of any requirements of any Canadian Regulatory Authority relating to the Product.

 

CONFIDENTIAL

 

(d) BLS’s Right of Reference. ACADIA shall in a timely manner provide BLS with all Regulatory Filings, and any data included or referenced therein, with respect to Product (i) for use outside the Territory and (ii) for use outside the Field in the Territory, in each case, made by or on behalf of ACADIA or its Affiliates. During the Term so long as BLS has an exclusive license to Product in the Field in the Territory, BLS and its Affiliates, Distributors and Sublicensees shall have the royalty-free right to reference and use all Regulatory Filings (including data included or referenced therein) Controlled by ACADIA or its Affiliates with respect to Product (x) for use outside the Field in the Territory and (y) for use outside the Territory, in each case, solely in connection with any Marketing Approval BLS or its Affiliates, Distributors or Sublicensees may seek to obtain with respect to Product in the Field in the Territory.

(e) ACADIA’s Right of Reference. BLS shall in a timely manner provide ACADIA with all Regulatory Filings, and any data included or referenced therein, with respect to Product for use in the Field in the Territory made by or on behalf of BLS (including any Affiliate, Distributor or Sublicensee of BLS). During the Term, ACADIA and its Affiliates shall have the royalty-free right to reference and use all Regulatory Filings (including data included or referenced therein), with respect to Product for use in the Territory Controlled by BLS or any of its Affiliates, Distributors or Sublicensees solely in connection with any Marketing Approval ACADIA or its Affiliates may seek to obtain with respect to Product (i) for use outside the Territory and (ii) for use outside the Field in the Territory.

(f) Permitted Licensees’ Data Right and Right of Reference . ACADIA shall have the royalty-free right to (i) access to, and grant licenses to its Permitted Licensees under, the data generated by or on behalf of BLS (including any Affiliate, or Distributor or Sublicensee of BLS) intended to be incorporated in an NDA of Product in the Field in the Territory and (ii) provide access to and grant to its Permitted Licensees the right to reference and use the NDA, in each case, solely in connection with any Marketing Approval ACADIA or its Affiliates or Permitted Licensees may seek to obtain for Product for use outside the Field in the Territory or for use outside the Territory.

(g) Pharmacovigilance. ACADIA shall be responsible, at its own expenses, for the maintenance of the global safety database for Product. Each Party shall cooperate (at its sole cost and expense), and shall cause its Affiliates, licensees, Distributors and Sublicensees to cooperate, in implementing a pharmacovigilance mutual alert process with respect to Product to comply with all applicable legal obligations of Regulatory Authorities. The Parties shall enter into a pharmacovigilance agreement on terms no less stringent than those required by ICH guidelines, including: (i) providing detailed procedures regarding the maintenance of core safety information and the exchange of safety data relating to Pimavanserin and Product worldwide within appropriate timeframes and in an appropriate format to enable each party to meet both expedited and periodic regulatory reporting requirements; and (ii) ensuring compliance with the reporting requirements of all applicable Regulatory Authorities on a worldwide basis for the reporting of safety data in accordance with standards stipulated in the ICH guidelines, and all applicable regulatory and legal requirements regarding the management of safety data.

 

CONFIDENTIAL

 

4.8 Expenses.

(a) Funding Obligation. Subject to the terms of this Section 4.8:

(i) BLS shall bear 100% of all Development Expenses, excluding […***…] Expenses related to the ACADIA Studies (other than that portion of the ACADIA Studies for which the Parties mutually agree to share costs pursuant to the Development Plan and applicable Budget), that do not exceed the Budget for such Development Expenses by more than […***…] unless otherwise approved by the Development Committee […***…];

(ii) […***…];

(iii) BLS shall bear 100% of all Regulatory Expenses that do not exceed the Budget for such Regulatory Expenses by more than […***…] unless otherwise approved by the Development Committee; and

(iv) BLS shall bear 100% of all costs and expenses in conducting studies and activities to support development and regulatory activities relating to Pimavanserin and Product for obtaining Marketing Approval for Product in the Field in Canada, which are not otherwise included in Development Expenses and Regulatory Expenses.

The Responsible Party shall not be entitled to payment by the other Party for any Expenses that exceed the Budget for such Expenses by more than […***…] unless otherwise approved by the Development Committee; provided that the Development Committee shall in good faith consider adjustments to the Budget for any Expenses or payment of Expenses that exceed the Budget for such Expenses by more than […***…] to accommodate circumstances that arise following the determination of the applicable Budget.

(b) Payment. Within […***…] days after the end of each Calendar Quarter, each Party shall provide a written report (each, a “ Quarterly Report ”) to the other Party setting forth in reasonable detail the Expenses (together with the evidence supporting such Expenses) relating to such Calendar Quarter. Within […***…] days after the end of such Calendar Quarter, BLS shall provide ACADIA a written report based upon the Quarterly Reports (each, a “ Payment Report ”) setting forth the amount payable by BLS to ACADIA in accordance with Section 4.8(a) or the amount payable by ACADIA to BLS in accordance with Section 4.8(a). BLS shall pay the amount due to ACADIA as set forth in the applicable Payment Report at the time of delivery of such Payment Report, and in the case that the Payment Report reflects any amount payable by ACADIA to BLS, ACADIA shall pay such amount due to BLS within […***…] days after receipt of such Payment Report.

 

CONFIDENTIAL

 

(c) Audit. Each Party shall have the right to cause an independent, certified public accounting firm reasonably acceptable to the other Party to audit the other Party’s records relating to Expenses to confirm the amount of the Expenses reflected in the Quarterly Reports and Payment Reports. Such audit right may be exercised during normal business hours upon reasonable prior written notice to the audited Party; provided that such audit right may be exercised no more than once in any 12 month period and no more than once with regard to any given Calendar Quarter. As appropriate, prompt adjustments to payments made pursuant to this Section 4.8 shall be made by the Parties to reflect the results of such audit. The auditing Party shall bear the full cost of such audit unless such audit discloses an over-reporting by the audited Party of more than […***…] of the amount of Expenses for a given Calendar Quarter, in which case, the audited Party shall bear the full cost of such audit.

4.9 Transfer of Know-How. Promptly and no later than one month following the Effective Date, ACADIA shall make available to BLS, at no additional cost or expense to BLS, the ACADIA Know-How that exists as of the Effective Date. During the Term, ACADIA shall provide to BLS, at no additional cost or expense to BLS, all ACADIA Know-How that has not previously been provided hereunder promptly upon such ACADIA Know-How being obtained or generated by ACADIA. During the Term, BLS shall provide to ACADIA, at no additional cost or expense to ACADIA, all BLS Know-How as is necessary to enable ACADIA to conduct development activities assigned to it under the Development Plans and, if ACADIA has exercised its Co-Promotion Option, to co-promote Product in the Field in the United States.

4.10 Use of Subcontractors. Each Party may subcontract some of its development activities under this Agreement to one or more subcontractors, provided that (a) none of the other Party’s rights hereunder are diminished or otherwise adversely affected as a result of such subcontracting, and (b) the subcontractor undertakes in writing obligations of confidentiality and non-use regarding Confidential Information which are no less stringent than those undertaken by the Parties pursuant to Article 8. In the event a Party performs any of its development activities hereunder through a subcontractor, then such Party shall at all times be fully responsible for the performance and payment of such subcontractor.

4.11 Materials Transfer. In order to facilitate the development activities contemplated by this Agreement, either Party may provide to the other Party certain biological materials or chemical compounds Controlled by the supplying Party (collectively, “ Materials ”) for use by the other Party in furtherance of such development activities. Except as otherwise provided for under this Agreement, all such Materials delivered to the other Party will remain the sole property of the supplying Party, will be used only in furtherance of the development activities conducted in accordance with this Agreement, will not be used or delivered to or for the benefit of any Third Party, except for subcontractors pursuant to Section 4.10, without the prior written consent of the supplying Party, and will be used in compliance with all Applicable Laws. The Materials supplied under this Agreement must be used with prudence and appropriate caution in any experimental work because not all of their characteristics may be known. Except as expressly set forth in this Agreement, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

CONFIDENTIAL

 

4.12 ACADIA’s Development Efforts Outside the Territory or Outside the Field. ACADIA agrees and acknowledges that it is in the Parties’ mutual interests to keep BLS reasonably informed as to the efforts of ACADIA or ACADIA’s licensees or collaborators in developing any Product for use (i) outside the Territory or (ii) outside the Field in the Territory. ACADIA shall provide […***…], regular summaries of development activities, including Regulatory Filings and summary results of all preclinical studies and clinical trials prepared according to applicable national and international ( e.g., ICH, GCP, GLP, and GMP) guidelines, in each case, with respect to any Product being developed for use outside the Territory or outside the Field in the Territory. ACADIA shall use its Commercially Reasonable Efforts not to conduct […***…], any activities with respect to Pimavanserin and Product that would have a material adverse effect on the development or commercialization of any Product that is being developed or commercialized by BLS, its Affiliates, Distributors or Sublicensees pursuant to this Agreement. ACADIA shall […***…] enter into good faith negotiations with BLS to resolve any concerns BLS may have with respect to such activities.

ARTICLE 5

COMMERCIALIZATION AND PROMOTION; MANUFACTURE AND SUPPLY

5.1 Commercialization of Product.

(a) BLS Responsibilities. BLS shall be solely responsible for commercializing Product in the Field in the Territory in accordance with to the terms and conditions of this Agreement. It is anticipated that BLS may enter into distribution and supply agreements with its Affiliates or Third Parties for the commercialization of the Product in the Territory. Further, regardless of whether ACADIA exercises the Co-Promotion Option as provided in Section 5.2 below, during the Term, BLS shall have the exclusive right and responsibility, which may carried out by BLS itself or its Distributors or Sublicensees, to commercialize Product in the Field in the Territory, including, but not limited to:

(i) establishing the commercialization and marketing strategy and tactics (the “ Commercial Strategy ”);

(ii) establishing pricing and reimbursement policy;

(iii) managed care contracting;

(iv) receiving, accepting and filling orders;

(v) distribution to customers;

 

CONFIDENTIAL

 

(vi) controlling invoicing, processing orders and collecting accounts receivable for sales; and

(vii) recording sales in its books of account for sales.

(b) Commercialization Plan. Within a reasonable time prior to anticipated launch of a Product, BLS shall prepare or shall cause its Distributors or Sublicensees to prepare a plan setting forth the commercialization plan for the marketing, promotion and pricing of Product in the Field in the Territory, which plan shall be in reasonable scope and detail and may be amended by BLS. BLS shall provide, or cause to be provided, such plan to ACADIA on an annual basis and shall provide, or cause to be provided, any material amendments to such plan to ACADIA. Without limiting the provisions of this Section 5.1, BLS shall regularly consult with and provide updates to ACADIA regarding the Commercial Strategy and the commercialization of Product in the Field in the Territory. The Parties shall form a business forum to coordinate commercial activities in the Territory with activities in the rest of the world. BLS shall meet regularly with designated representatives of ACADIA to discuss the commercialization of Product in the Field in the Territory. In addition, the Senior Executives of the Parties shall have regular contact to discuss matters relating to the commercialization of Product. If ACADIA exercises the Co-Promotion Option set forth in Section 5.2, then the Parties shall form a committee to coordinate and facilitate commercial activities amongst the Parties.

(c) Diligence. BLS shall use, and shall cause its Distributors or Sublicensees to use, Commercially Reasonable Efforts to market, promote and commercialize Product with respect to which BLS has obtained the Marketing Approval in the Field in the Territory in accordance with the provisions of this Agreement.

5.2 ACADIA Co-Promotion Option. ACADIA shall have […***…] option to co-promote Product in the Field in the United States with a Distributor or a Sublicensee (the “ Co-Promotion Option ”) in accordance with the Commercial Strategy. ACADIA may exercise the Co-Promotion Option […***…], by notifying BLS in writing at least […***…] days in advance. In the event that ACADIA exercises the Co-Promotion Option as provided in this Section 5.2, ACADIA shall have the exclusive right to detail and promote Product in the Field in the United States with the applicable Distributor or Sublicensee during the Term according to the terms set forth in Exhibit A . In the event that ACADIA does not exercise a Co-Promotion Option as provided in this Section 5.2, ACADIA shall have no right to promote and detail Product in the Field in the United States with BLS, and BLS shall have no further obligation with respect to the relevant Co-Promotion Option. BLS shall require the applicable Distributor or Sublicensee, to whom it has delegated BLS’ obligations under Exhibit A , to honor the Co-Promotion Option and enter into the Co-Promotion Agreement (as defined in Exhibit A ), if the Co-Promotion Option is exercised by ACADIA in accordance with this Section 5.2. In the event that such Distributor or Sublicensee does not enter into the Co-Promotion Agreement, then ACADIA shall be […***…].

 

CONFIDENTIAL

 

5.3 Manufacture and Supply.

(a) In the Territory. ACADIA and BLS shall develop and reasonably agree upon a detailed plan to transfer to BLS, at BLS’s expense (solely with respect to Costs and Expenses), responsibility for manufacturing and supply of Pimavanserin and Product in the Field in the Territory. BLS shall have responsibility for the management of, at its sole discretion, the manufacture, packaging, labeling and supply of Product in the Territory for PDP (where BLS has not terminated this Agreement […***…]), and ADP (where BLS has elected to pursue ADP and has not terminated this Agreement […***…]). It is anticipated that BLS will enter into manufacturing and packaging agreements with one of its Affiliates and/or a Third Party for the manufacture, packaging and labeling of Product for sale in the Territory for PDP and ADP.

(b) BLS’s Supply Right. If ACADIA elects to commercialize Product, whether on its own or with any Affiliate or Third Party, or otherwise licenses a Third Party to commercialize Product either (i) outside the Territory, or (ii) within the Territory […***…], where BLS has elected not to pursue such Indication, then ACADIA may offer to BLS the right to manufacture and supply Product to ACADIA and/or its Affiliates and licensees in such countries. If offered to and accepted by BLS, the applicable Parties shall negotiate in good faith the terms and conditions of such manufacture and supply.

5.4 Territory Compliance . ACADIA and its Affiliates and licensees (i) shall not, directly or indirectly, commercialize any Product in the Field in the Territory, subject to the right to co-promote upon exercise of the Co-Promotion Option, and (ii) shall promptly cease selling or distributing any Product to any Third Party, or otherwise assisting any Third Party, who is commercializing or attempting to commercialize or distribute any Product in the Field in the Territory. BLS and its Affiliates, Distributors and Sublicensees (A) shall not, directly or indirectly, commercialize the Product outside the Territory or outside the Field in the Territory and (B) shall promptly cease selling or distributing the Product to any Third Party, or otherwise assisting any Third Party, who is commercializing or attempting to commercialize or distribute the Product outside the Territory or outside the Field in the Territory.

ARTICLE 6

PAYMENTS

6.1 Initial Payment. In consideration for the licenses and rights granted to BLS hereunder, BLS shall pay to ACADIA a payment in the amount of US$30,000,000 upon the Effective Date. […***…]. The payments set forth in this Section 6.1 shall not be refundable or creditable against any other payments by BLS to ACADIA under this Agreement.

6.2 Milestone Payments. In further consideration for the licenses and rights granted to BLS hereunder, BLS shall pay to ACADIA the milestone payments set out below following the first achievement of the corresponding milestone. A Party shall notify

 

CONFIDENTIAL

 

the other Party in writing within […***…] days after the achievement of each milestone event, and ACADIA shall invoice BLS at the time of or following such notice for the applicable milestone payment. BLS shall pay to ACADIA the amounts set forth below within […***…] days after its receipt of ACADIA’s invoice. The payments set forth in this Section 6.2 shall not be refundable or creditable against any other payments by BLS to ACADIA under this Agreement, […***…].

 

 

CONFIDENTIAL

 

If BLS develops Product in an Indication other than the PDP or ADP that reaches Milestone Event 3(a) or 3(b) and the Development Committee has not approved such Indication as the Third Indication, such Indication shall be deemed the Third Indication for purposes of the foregoing milestone payments. Any milestone payment payable by BLS pursuant to Section 6.2 shall be made no more than once with respect to the achievement of each such milestone event. For clarity, if development of a Product is discontinued and a replacement Product is developed, then milestone payments shall be due only for any milestone events achieved by the replacement Product that were not reached by the discontinued Product. […***…].

 

CONFIDENTIAL

 

6.3 Royalty Payments.

(a) Royalty Rate. Subject to the terms and conditions of this Agreement, in further consideration for the licenses and rights granted to BLS under this Agreement, BLS shall pay to ACADIA royalties as set forth below on aggregate annual Net Sales:

 

(b) Third Party Licenses.

(i) If, during the Term, BLS determines that it is necessary to obtain a license from any Third Party to any issued patent and patent application in order to practice the ACADIA Technology to manufacture, use, sell or import Pimavanserin or Product (but expressly excluding any device or active pharmaceutical component of Product other than Pimavanserin) for use in the Field in the Territory, […***…].

(ii) […***…].

(c) Generic Competition. On a country-by-country basis and Product-by-Product basis, in any country in the Territory in which there is no Valid Claim within the ACADIA Patents or the Joint Patents that covers the composition of Pimavanserin or the applicable Product, or the manufacture or use of Pimavanserin or such Product in the Field, in such country, the royalty rate applicable to the Net Sales of such Product in such country set forth in Section 6.3(a) shall be […***…]. For the purposes of this

 

CONFIDENTIAL

 

Section 6.3(c), the amount of gross sales of Product shall be ascertained by reputable published marketing data for such country (e.g. by reference to sales data collected by IMS) or as otherwise mutually agreed. The term “ Generic Product ” refers to a pharmaceutical product containing Pimavanserin and the same other active ingredient(s), as applicable, as the Product being sold by BLS or its Affiliates, Distributors and Sublicensees, which is marketed by an entity other than BLS, its Affiliates, Distributors or Sublicensees in the Field. […***…].

(d) Royalty Term. On a country-by-country basis and Product-by-Product basis, BLS’s obligation to make royalty payments pursuant to this Section 6.3 will commence upon the First Commercial Sale of a Product in a country in the Territory and shall continue until […***…] (the “ Royalty Term ”).

(e) One Royalty. Only one royalty shall be due by BLS to ACADIA with respect to the same unit of Product.

ARTICLE 7

PAYMENTS, BOOKS AND RECORDS

7.1 Payment Method. All payments to ACADIA under this Agreement shall be made by bank wire transfer in immediately available funds to an account in the name of ACADIA designated in writing by ACADIA. Payments hereunder shall be considered to be made as of the day on which they are received by ACADIA’s designated bank.

7.2 Payment Currency: Currency Conversion.

(a) United States Dollars. Unless otherwise expressly stated in this Agreement, all amounts specified to be payable under this Agreement are in United States Dollars and shall be paid in United States Dollars.

(b) Currency Conversion. Net Sales in countries in the Territory invoiced in currency other than United States Dollars, as appropriate, shall be translated to United States Dollars using an exchange rate equal to the weighted average of the rates of exchange for the currency of the country from which the payments are payable as published by The Wall Street Journal , Eastern U.S. Edition, during the Calendar Quarter for which a payment is due.

7.3 Taxes.

(a) Cooperation and Coordination. The Parties acknowledge and agree that it is their mutual objective and intent to minimize, to the extent feasible, income and other taxes payable with respect to their collaborative efforts under this Agreement and that they shall use their reasonable efforts to cooperate and coordinate with each other to achieve such objective.

 

CONFIDENTIAL

 

(b) Payment of Tax. A Party receiving a payment shall pay any and all taxes levied on such payment. If the fiscal or taxing authorities of any relevant jurisdiction assert that amounts are required to be withheld from the payments due to a Party hereunder, or the tax laws in one or more jurisdictions have changed so as to explicitly require such treatment, the Party made aware of such assertion or change in law shall inform the other Party within 30 days and shall consult with the other Party regarding the consequences of such assertion or change. If applicable laws require that taxes be deducted and withheld from a payment, the remitting Party shall (i) deduct those taxes from the payment; (ii) pay the taxes to the proper taxing authority; (iii) send evidence of the obligation together with proof of payment to the other Party within 60 days following that payment; and (iv) shall provide such assistance as the other Party may reasonably require in obtaining any refund of such amounts to which the other Party may be entitled, to the extent that such assistance does not cause the remitting Party to incur any liability in respect of the taxes asserted to be due.

7.4 Records. BLS shall keep, and require its Affiliates, Distributors and Sublicensees to keep, complete, true and accurate books of accounts and records for the purpose of determining the amounts payable to ACADIA pursuant to this Agreement. Such books and records shall be kept for such period of time required by law, but no less than at least 3 years following the end of the Calendar Quarter to which they pertain. Such records shall be subject to inspection in accordance with Section 7.5.

7.5 Audits. Upon not less than 60 days’ prior written notice, BLS shall permit an independent, certified public accountant selected by ACADIA and reasonably acceptable to BLS, which acceptance will not be unreasonably withheld or delayed (for the purposes of this Section 7.5, the “ Auditor ”), to audit or inspect those books or records of BLS, its Affiliates, Distributors and Sublicensees that relate to Net Sales and Royalty Reports for the sole purpose of verifying the: (a) royalties payable hereunder in respect of Net Sales; (b) withholding taxes, if any, required by Applicable Law to be deducted as a payment by BLS in respect of such Net Sales; (c) exchange rates used in determining the amount of United States dollars. The Auditor shall disclose to ACADIA only the amount and accuracy of payments reported and actually paid or otherwise payable under this Agreement. The Auditor shall send a copy of the report to BLS at the same time it is sent to ACADIA. Such inspections may be made no more than once each Calendar Year and during normal business hours. Such records for any particular Calendar Quarter shall be subject to no more than one inspection. […***…]. ACADIA shall endeavor in such inspection not to disrupt the normal business activities of BLS, or its Affiliates, Distributors or Sublicensees.

7.6 Financial Reporting and Auditing Cooperation. If BLS and/or any of its Affiliates that control (as such term is used in Section 1.12) BLS determine that, based on their analysis and subsequent discussions with their external auditors and following discussion with ACADIA, BLS and/or such Affiliates are required to consolidate ACADIA under GAAP, the Parties shall collaborate in good faith to […***…] identify and mutually agree on standard financial information that ACADIA shall provide to BLS and such

Affiliates in order for BLS and such Affiliates to prepare such consolidated financial statements […***…]; provided that in no event shall any such accommodation restrict ACADIA’s ability to conduct its operations in the normal course of business.

 

CONFIDENTIAL

 

7.7 Late Payments. In the event that any payment due under this Agreement is not made when due, the payment shall accrue interest from the date due at a rate per annum equal to […***…] above the U.S. Prime Rate (as set forth in the Wall Street Journal, Eastern Edition) for the date on which payment was due, calculated daily on the basis of a 365-day year, or similar reputable data source; provided that, in no event shall such rate exceed the maximum legal annual interest rate. The payment of such interest shall not limit the Party entitled to receive such payment from exercising any other rights it may have as a consequence of the lateness of any payment.

ARTICLE 8

CONFIDENTIALITY

8.1 Confidential Information. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, the Parties agree that the receiving Party (the “ Receiving Party ”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any confidential or proprietary information and materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) which is disclosed to it by the other Party (the “ Disclosing Party ”) including, but not limited to, all information concerning Pimavanserin and/or Product, information disclosed by one Party to the other pursuant to the Confidentiality Agreement and any other technical or business information of whatever nature (collectively, “ Confidential Information ”).

8.2 Exceptions. Notwithstanding Section 8.1 above, the obligations of confidentiality and non-use shall not apply to Confidential Information that, in each case as demonstrated by competent evidence:

(a) was already known to the Receiving Party or any of its Affiliates, other than under an obligation of confidentiality, at the time of disclosure;

(b) was generally available to the public or was otherwise part of the public domain at the time of its disclosure to the Receiving Party;

(c) became generally available to the public or otherwise part of the public domain after its disclosure by the Disclosing Party and other than through any act or omission of the Receiving Party or any of its Affiliates in breach of this Agreement;

 

CONFIDENTIAL

 

(d) was subsequently lawfully disclosed to the Receiving Party or any of its Affiliates by a Person other than the Disclosing Party, and who, to the best knowledge of the Receiving Party, did not directly or indirectly receive such information directly or indirectly from the Disclosing Party under an obligation of confidence; or

(e) was developed by the Receiving Party or its Affiliate without use of or reference to any information or materials disclosed by the Disclosing Party.

8.3 Permitted Disclosures. Notwithstanding the provisions of Section 8.1, each Party may disclose Confidential Information belonging to the other Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary in the following instances:

(a) filing or prosecuting Patents as permitted by this Agreement;

(b) prosecuting or defending litigation as permitted by this Agreement;

(c) complying with applicable court orders or governmental regulations; and

(d) disclosure to Third Parties in connection with due diligence or similar investigations by or on behalf of a Third Party in